IVA query

Kopite73

Hi,

My wife and I had our "lightbulb" moment just after Xmas and have been in contact with CCCS, who who recommended that we take out an IVA.

My wife was a self-employed childminder but the family she worked for could no longer afford a childminder so she's been out of work since October. We were just about keeping our heads afloat making minimum payments on loans and credit cards. Unfortunately Xmas pushed us over the edge and a couple of payments in December were missed or severely underpaid.

In total, our debt is just over £50k - all unsecured debts. Nearly half of the total amount is one bank loan. We don't own any property (we're currently living with my mother-in-law) and we don't own a car.

I've been reading through the paperwork CCCS have sent us and as I said, they've recommended we take out an IVA. My understanding is that the IVA has to be approved by 75% of our creditors and that the % is based on the amount owed, not by how many creditors there are - so the bank loan would be nearly 50% of the vote.

Can anybody advise me - how often do IVA's get turned down ? My worry is that the bank might say no. So far we've only missed the one payment to them (a few have been paid late in the past). Because this was always our biggest debt, this has been the one we've always concentrated on making sure it got paid - often at the expense of missing/underpaying others.

The other creditors might say yes as they can see how hit-and-miss our repayments have been in the past but the bank.... ?

Thanks.

Kopite73

<bump>

No ideas anyone ? Sorry for bumping my post to get it back on the 1st page but we're a little bit scared by the whole IVA process and what we could do if it was all to go wrong !

Charco_2

Sorry, perfectly good idea to bump this back up for those who missed it first time round... i missed it!

Who is the bank for the loan that's 50% of your total? (this can sometimes matter too)

Something to remember!
Your IP only gets paid for work that is accepted.
It takes as much work to put forward a case that gets rejected as it does for a case to be accepted... so your IP is unlikely to take on work that they feel has little chance of being accepted because it would actually cost them money.

Another thing to note is that most cases are not rejected outright, creditors don't say "NO" very often... they're more likely to say "Yes IF..." and then give a few conditions. The conditions generally include cutting a number of your costs and so increasing your contribution to the IVA.

Have you signed and returned the IVA?

Kopite73

Thanks for your reply.

The loan is with Natwest and we're still waiting for the IVA company to get in touch with us (we only spoke to CCCS last week).

skintflint103

take a second look at this, you have no assetts and no career that demands that you don't go bankrupt. An IVA means you will locked into this payment that will most likley increase every year for 5 years. You will not in that time be able to get a loan,crdit card, mortgage etc. you will remain on the insolvency registerfor the whole time and the iva will show on your credit file for 12 months afterwards. you will effectivley be bankrupt and all credit references agencies treat IVA and bankrupt equally. If you were to go bankrupt you will be discharged in a max of 12 month be off the insolvency register 3 months after . At that point you will be able to re-start your credit file, which will take 12-18 months to get anywhere near creditworthy. you may according to income and expenditure need to pay a monthly amount to your creditors for 36 months. You do not go in the local paper since april 09 and nobody will come to your house. You do not need a 'by your leave' from creditors to do this,it is your decision only. Look at the fees in the iva agains the fees in bankruptcy. IVA propsals put the 2 lists of cost side by side to make it look like you will be liable for the bankruptcy costs. WRONG. You only have to pay those cost less the 510 or 360 to the court to present the petition. Read now or repent in leisure.The only reason to go into an IVA is if you a. feel you must pay something to your creditors b,you have assetts like a house with more than £1,000 equity ,shares ,antiques or anything of value that you don't want sold,c, you are a director of a ltd company or your job or career prohibits bankruptcy. There is no more 'stigma' in bankruptcy than an IVA and it is a fith of the time for a fraction of the cost.

Kopite73

CCCS didn't suggest bankruptcy, or is that something they wouldn't mention as an option ?
Their options were a 5 year IVA or if by DMP it could take nearly 14 years to clear.

Choo_Choo_4

skintflint103 wrote: »

take a second look at this, you have no assetts and no career that demands that you don't go bankrupt.

Kopite - whichever IVA company does get in touch with you regarding your situation they should go through all options with you: Bankruptcy, IVA, Debt Management Plan ... each solution should be explained in detail and advisor should give you their opinion of which they think might be best for your situation (an opinion is that - the decision however is yours.)

Bankruptcy will not have any effect on your situation given that you live in rented accommodation and presumably it doesn't affect your income (you said that your wife has been out of work for a while but sorry, I can't recall if you mentioned your field of employment - so would just need to confirm that it wouldn't affect you)

An IVA means you will locked into this payment that will most likley increase every year for 5 years. You will not in that time be able to get a loan,crdit card, mortgage etc. you will remain on the insolvency registerfor the whole time and the iva will show on your credit file for 12 months afterwards. you will effectivley be bankrupt and all credit references agencies treat IVA and bankrupt equally.

Yes - when you propose an IVA - it is a 5 year plan. You can meet the IP face to face and discuss everything with them (or sometimes over telephone) but even after this meeting you do NOT have to proceed NOR should you have to pay anything for this advice.
You are not LOCKED into this arrangement. If something happens whereby you feel it is no longer the best solution for you then you can still choose the bankruptcy option (this decision can sometimes be made for you for a number of reasons - no longer able to work due to illness, made redundant ... )
IVA PAYMENT will not increase every year for 5 years... an Annual Review should be done which will reassess your situation in turn increasing payment IF your situation has improved considerably but also decreasing if the opposite has happened.
You should be able to discuss any problems that arise with your supervisor and if you feel necessary directly with your IP - variations can be called where necessary to strike a new deal with creditors when circumstances arise meaning that you can no longer afford £400 per month but might be able to offer a reduced payment or if you've received a decent redundancy package and still owe £15k to creditors over 38 months but might like to offer them £9k now to settle early.

Skintflint you are turning into a bit of a scaremonger here.
Bankruptcy is a perfectly good solution for Kopite and one that SHOULD be explained to him and offered as a solution by a reputable firm.

Yes - if there is a surplus income payments will still have to be made each month as in IVA but only for 3 years instead of 5 years but surely if client doesn't WANT to go bankrupt they shouldn't be forced down that route - but no reason why they shouldn't consider it.

IVA propsals put the 2 lists of cost side by side to make it look like you will be liable for the bankruptcy costs. WRONG.

INDEED WRONG

This proposal which shows the IVA v Bankruptcy comparison is for the benefit of creditors moreso than client. OF COURSE they wouldn't be liable for bankruptcy costs!

This is the client's proposal to creditors (albeit drawn up by an IP) - an IVA has to be beneficial to creditors over bankrutpcy otherwise why would they accept it?!

There is no more 'stigma' in bankruptcy than an IVA

There is no stigma attached to bankruptcy anymore ... at least there shouldn't be. Circumstances arise in life that mean we can no longer live the same lifestyle we have for the past 10 years. Again redundancy or serious illnesses are often the reasons behind this and bankrutpcy is a solution - a chance to make a fresh start ...

KOPITE ... I would strongly advise that you speak to the IVA Company first and foremost and listen to their advice. Speak to a few companies and compare notes. Bankruptcy will certainly be an option for you if this is one you'd consider but get seek advice first and then make your OWN decision - just remember not to pay for this

Good Luck

skintflint103

Well thankyou Choo choo for taking the considerable effort to extrapolate my very points. as you quite rightly say you are not 'locked into this 5 year plan and can withdraw at any time' will you know explain to the nice public what will happen to all the monay paid into the iva in that time? I'll just say they've lost it and you explain in less than 10,ooo words why that's o.k. And the next chapter will be on if payments are reduced, the term is increased by?. Oh sorry I nearly forgot who pays for all these meetings and 'renegotiations' silly me I thought it was the IVA companies.In your own words please. I hope I am a scare monger for those people who now have an option but think that bankrupts have to walk arround with a funny hat for 12 years. As I say advice for IVA is if its appropriate it is Bankruptcy with a fancy title. Why is it made in the bankruptcy Court.?Go with that knowledge and you can't cry afterwards.

Charco_2

"will you know (now) explain to the nice public what will happen to all the monay (money) paid into the iva in that time? I'll just say they've lost it and you explain in less than 10,ooo words why that's o.k."

Well I'm sure no-one is going to assume that this is OK. As it happens they have not "lost it" - a proportion of it will go into paying the fees accrued until now in having hired a qualified professional to look after your finances for x number of years, and the remainder will be dispersed among your creditors* The figure to be dispersed will obviously be insufficient to cover the debts (otherwise you'd just have been paying your debts) and so liabilities to the creditors will remain.

I fail to see where anyone (but you) posted:
you are not 'locked into this 5 year plan and can withdraw at any time'
but it was nice of you to put quotation marks all the same. If something happens during the course of your five year IVA which changes your circumstances and makes your current repayments unrealistic or unmanageable then you can speak to your IP about having the repayments reduced.
And the next chapter will be on if payments are reduced, the term is increased by?
The repayment term will not necessarily have to be increased. Depending on the circumstances the IVA could even be ended successfully right there and then - even if it is just the middle of year three of your IVA! There are many ways around changing ciurcumstances which will ultimately depend on ACCEPTANCE BY THE CREDITORS - it is not the IP who says you have to pay more/longer/fail etc the final call is the vote of the creditors. If you've promised a dividend of 25p in the £ then that's what the creditors have accepted. If you reduce your payments by £50 a month at a later stage then does it not make sense to increase the payment term to achieve the same or similar dividend? Of course it also possible to simply see out the original length of the IVA - IT ALL DEPENDS ON CIRCUMSTANCES but the general theme is if you can afford should, you should pay it - is that not reasonable?

* How do you manage to put food on your table Skint, seeing as how you work for free and all!

skintflint103

I'm retired mate I just give unbiased advice, do you? The readers will judge, seems to be an admission though!

Charco_2

An admission of what?

Being retired now doesn't mean you worked for free?

As for unbiased advice, I can't see one post that you've made that has relied on facts instead colourful angry rants to base your answers on! You've a bee in your bonnet about something and it certainly affects your judgement